Feb 1st 1999: Microsoft plans to apply a rental licensing model across all its products with the exception of desktop ("bootable") operating systems, a senior manager has revealed.

Jacques Bablon, director of volume licensing, confirmed to ASP News Review last week that the vendor is due to roll out a pilot scheme this spring with service providers. Initially, it will test out rental licensing with server products such as Windows NT Server, Exchange, SQL Server, Site Server and Terminal Server. Ultimately, the scheme will extend to desktop applications.

"Once we have rolled out the server products, we will apply the licensing model to application products such as Office, Project, etc," he said.

Microsoft uses the term "commercial use" to denote application rental. The move towards this form of licensing has been in response to demand from Internet service providers (ISPs), telcos and application service providers (ASPs). Also known as Commercial Service Providers (CSPs), these organisations typically want to deploy Microsoft server products in a hosted environment, Bablon explained.

"The goal is to roll out a pilot offering to a set of CSPs in spring to meet initial customer demand and to gather feedback on our model," he said.

Microsoft has already introduced an experimental form of rental licensing with its Commercial Internet System (MCIS), an Internet server package designed for large-scale ISP hosting. This includes a Subscriber Access Licence (SAL) option whereby the hosting provider pays a variable licence fee according to the peak number of application subscribers in each month. The next phase is to extend rental licensing to other server products.

Once the vendor has settled on a workable model, it will apply it across the board. "Microsoft is focused on developing a consistent licensing strategy for all our products," said Bablon. Only the "bootable" operating systems such as Windows 98 and NT Workstation "will not be available for anonymous, concurrent, or commercial use," he said.

Last month, Microsoft revised licensing on its Terminal Server Edition (TSE) of Windows NT, introducing a lower-cost Client Access Licence for named users and an Internet Connector for anonymous Internet users. But ASPs argued it should go further and adopt a fully-fledged rental model.

"I do not see why they should not do it on applications - it will benefit Microsoft," commented Jostein Eikeland, founder and business development director at Oslo, Norway-based ASP Telecomputing.